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Is This Bank Being Cased?

There's no denying that banks are where the money is--on takeover bets. The recent merger pact between PNC Bank and Midlantic attests to this trend in banking stocks.

One bank holding company that some pros believe is a target is City National (CYN). Its sole subsidiary, City National Bank in Beverly Hills, Calif., provides commercial banking services for small-to-midsize companies through its 16 offices in California. The shares, trading at 12 on the Big Board, are "behaving in a pattern that indicates buying pressure is coming in at progressively higher prices," says one arbitrageur at a New York investment bank. "Whenever the stock falls back, it closes at levels higher than the prior-day closing price. That means the shares are under serious accumulation."

One takeover investor, who figures City National shares are worth about 20 in a takeover, says First Interstate, another California bank, is eyeballing the company. He suspects that California's two biggest banks, BankAmerica and Wells Fargo, are also interested. Spokespersons for BankAmerica, City National, First Interstate, and Wells Fargo declined comment.

The sixth-largest bank in California, City National returned to profitability last year after two years of losses. Analyst Johnny Svoren of The Red Chip Review in Portland, Ore., says City National's restructuring and consolidation efforts helped resuscitate the company. He sees City National making 89 cents in 1995 and 96 cents in 1996, from 81 cents last year.BY GENE G. MARCIAL